Which statement is true about general obligation bonds?

General obligation bonds are a type of municipal bond that are issued by governments to fund public projects such as schools, parks, and infrastructure improvements. The defining characteristic of general obligation bonds is that they are backed by the full faith and credit of the issuing government. This means that the issuer has pledged to use its taxing power to repay the bondholders, which provides a high level of security for investors.

The strength of general obligation bonds lies in the ability of the issuing government to levy taxes to meet its debt obligations. Therefore, investors view these bonds as relatively low-risk compared to other types of bonds that may rely on specific revenue sources or have other risks associated with them.

This is why the statement about these bonds being backed by the full faith and credit of the issuing government is accurate. It reflects the government’s commitment to meet its financial obligations to bondholders, enhancing the bonds' attractiveness in the market.

The other statements do not accurately describe general obligation bonds. For example, while some bonds are secured by specific sources of revenue (like revenue bonds), general obligation bonds are not limited to such sources. They are not primarily aimed at private sector projects, but rather are used to fund public projects. Furthermore, these bonds typically do not indicate a higher risk